The Vote Solar Initiative is developing Project Permit, an interactive Website that scores municipal solar permitting practices nationwide. It helps permitting staff, solar advocates, and municipal leaders understand how their city or town’s permitting practices compare with best practices.

Visitors to ProjectPermit.org can view a Solar Permitting Scorecard for their community, and see how their community contrasts with others around the country and with solar permitting best practices. If there is little or no information available for a community, stakeholders can contribute missing information about their communities’ permitting processes through www.solarpermit.org.

Vote Solar and the Interstate Renewable Energy Council have collaborated to release residential solar permitting best practices, used as a baseline comparison for the Solar Permitting Scorecard. The best practices were developed with feedback from the municipal officials and permitting experts. However, not all officials and experts may agree to all of the recommendations. For example, contrary to the best practices listed, our own PV inspection experts believe that performing more than one inspection, or requiring photos documenting the installation of roof mounted equipment as it is installed, may allow permitting officials to perform a more thorough overall inspection.

In addition to contributing data to solarpermit.org, solar stakeholders can help improve solar permitting in their city or town by encouraging officials to establish the solar permitting best practices identified. We recommend stakeholders make town officials and inspectors aware that a tool like ProjectPermit.org is available, and then allow town officials an opportunity to provide more information about the community’s current solar PV permitting practices, before assuming practices need to be changed.

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream. Since 2002, Vote Solar has engaged in state, local, and federal advocacy campaigns to remove regulatory barriers and implement key policies needed to bring solar to scale. Project Permits is funded by Solar 3.0, a U.S. Department of Energy Sunshot Initiative grant.

In a typical solar power purchase agreement (PPA), a community hosts solar PV on public rooftops or land and enters into a long-term contract for the purchase of electricity from the PV system(s). This third-party ownership model is the most common way in which Massachusetts communities procure solar PV systems (as opposed to outright ownership, for example). While 2010 and 2011 saw a significant number of public solar PPA projects in the state, interest from solar developers has slowed in recent months. As a result, those communities just releasing RFPs for their solar project or reviewing bids from a recent solicitation may not see as many responses or as attractive prices as their predecessors, leaving many to wonder –what is going on in the Massachusetts community solar market?

Concern over Renewable Energy Incentives

Solar Renewable Energy Credits (SRECs) generated by PV systems (which communities typically give over to solar developers in PPAs) are an important revenue stream in a developer’s financial model for a PV project. Due to recent analyses of and concerns about the state’s SREC market, some developers are struggling to secure SREC contracts at sufficient prices. Without adequate SREC contracts, developers cannot offer attractive PPA rates to communities. Many solar developers active in Massachusetts have slowed or stopped activity in the state.

What does that mean for my community’s hopes for a solar PPA project?

Some developers and analysts believe that Massachusetts SREC prices will recover in six to nine months and that the pace of development will pick up again at this time. In the interim, communities may not see as much interest from the development community or receive attractive PPA rates (e.g., less than 10 cents) on proposed projects.

In order to take advantage of federal incentives that apply to solar projects developed in 2012, community solar project teams should use this period to prepare for a summer 2012 RFP (or RFQ) release, should the SREC market turn around at that time. Proactive teams can use online tools such as the National Renewable Energy Lab’s In My Backyard tool or PVWatts for preliminary resource assessments and to narrow down potential project sites. Using the results of these analyses, as well as details about the sites, solar project teams should begin preparing language for a RFP or RFQ. If more detailed site assessments are conducted, finding should also be included in the RFP.

If and when Massachusetts SREC market projections improve, the most proactive project teams will be first in line to do business with an eager solar industry.

What if we are currently negotiating a solar PPA?

Local officials and staff in Massachusetts are constantly contacted by interested solar developers. If your community is executing a PPA project at this time, be sure to get as much information as possible as possible about the SREC assumptions used in the developer’s financial model for your project. If a developer assumes more than $285 per megawatt-hour (28.5 cents per kilowatt-hour) for 10 years worth of SRECs, tread cautiously. Make sure that your PPA does not contain, for example, a “Change in Law” provision that allows the developer to renegotiate the PPA price with you during the contract term if their SREC assumptions do not hold (e.g., if the assumptions about SRECs used to price your project were out of date or overly optimistic). Also, if the solar developer will use SREC brokers to sell the SRECs from your project, encourage them to get regular updates from their brokers on available SREC contracts.

The Commonwealth’s “Energy Smarts” blog is featuring the Town of Sutton’s Simonian Center for Early Learning Solar PV project – a Cadmus-supported project. At 202 kW, Sutton’s PV system is one of the largest municipally owned PV systems in the state. Cadmus provided owner’s agent services to the Town of Sutton through a technical assistance grant from the Massachusetts Department of Energy Resources (DOER).

Cadmus assisted the town throughout the development process, helping the town identify the most advantageous contract for the sale of Solar Renewable Energy Credits (SRECs) generated by the system (SRECs are tradable credits that represent the “greenness” of the solar electricity generated). A Cadmus master electrician inspected the completed project for compliance with electric code, ensuring that the system is safe for staff, students, and visitors at the Simonian Center. Finally, Cadmus organized a “virtual ribbon cutting” on behalf of the Town to celebrate the successful completion of Sutton’s PV project.

Power Purchase Agreements (PPAs) are appealing to cities and towns for several reasons, and frequently because they require no upfront investment by the community. Rather, cost to the community (in addition to non-price factors) is the per kilowatt-hour (kWh) rate for electricity generated by the renewable energy system –the PPA rate. Different developers may propose significantly different PPA rates when responding to the same solicitation. However, PPA rates proposed that are noticeably lower than other bids received may be too good to be true. Inappropriate pricing can compromise the economic viability of these projects and increase risk to the community.

This diagram shows the relationship between parties in a typical, community-scale solar PPA in Massachusetts. Not all PPAs are structured in this manner.

When considering PPA price proposals, it is important to consider both the cost in cents per kilowatt-hour and how financeable the project is at the given PPA rate. PPA projects with PPA rate that is too low may suffer from significant delays as the developer seeks financing from financing parties looking for some return on their investment. Such delays and false starts waste the significant time investments that proponents make to introduce renewable generation in their communities. In addition to lost momentum, incentives and other benefits (e.g., 30% U.S. Treasury Grant) that may be critical to a project’s economics may expire while the developer seeks financing. Ultimately, if the developer is unable to secure financing, the project will likely fall apart.

When examining PPA rates in cents per kilowatt-hour, bid evaluation teams should weigh the benefits of low PPA rates with potential risks:

In contract years 11 and beyond, the PPA rate should be high enough to fund operations and maintenance costs. That is, the PPA provider should have a financial incentive to continue to operate and maintain your system. PPA rates less than $0.02/kWh in years 11-20 should be considered cautiously. If your community entered into such a contract, and the PPA provider abandoned the system, would your community be able to fund maintenance or decommissioning costs?

Low PPA rates may be workable in the context of large projects that will generate significant revenue for the developer, for example, through solar electricity sales to the community and SRECs. However, small and moderately sized projects –especially those with relatively high installed costs (e.g., lengthy interconnection runs, tree stumping required), may not be financeable at a low PPA rate.

Finally, many PPAs contain language that allows for developers to exit the contract prior to commercial operation if they are unable to find financing. Therefore, selecting a PPA rate that makes financial sense to your community, the developer, and their financing partners is important to helping all parties efficiently realize the benefits of renewable energy.

DOER filed a report with the Massachusetts Department of Public Utilities outlining recommendations for utilities to improve the process of connecting new renewable energy generation installations to the electric grid. In its filing, DOER attached the Massachusetts Distributed Generation Interconnection Report which surveyed customers seeking interconnection in the state, researched policies in other states, interviewed utilities, and made specific recommendations about improving interconnection processes and policies.

The status of progress on these issues and scheduling for distributed generation (DG) workshops is available at the Massachusetts DG and Interconnection Website (http://bit.ly/MADGIC).

One of the main determinants of whether an RFP for a Power Purchase Agreement (PPA) will attract qualified developers and advantageous bids is estimated total potential capacity. If this information is not available, site area or rooftop square footage can serve as a proxy.

More Space. More Attention.

When conceiving of a renewable energy project, cities and towns should look to aggregate potential sites. Whether or not a PPA makes sense for the community will depend on the total amount of capacity that is feasible. For example, some PV developers require 500 kW of PV potential before proposing a solar PPA. Others will not pursue landfill solar projects that are smaller than two (2) MW. By aggregating as many rooftops and open spaces as possible in your project RFP, you will attract more vendors and capture economies of scale.

Whether conducting your own due diligence or investing in site assessments, your RFP should ultimately focus on quality sites. Buildings with aging roofs, for example, should be set aside for future phases. Those with many rooftop penetrations and little usable space should similarly be deferred.

If publicly-owned buildings and open spaces are very limited, look elsewhere. Consider partnering with a neighboring municipality or other public entity in the region (e.g., schools, hospitals). This may be especially helpful where the potential partner has experience with renewable energy projects. Together, you may receive bids that neither could have attracted alone.

Are you building a new school or other public building? If your community is interested in incorporating solar photovoltaics (PV) into a new building project, but unable to do so at this time, specifying a “solar ready” roof will set you up for future success, because many of the modifications made to accomodate solar PV as a retrofit are low/no cost at the design phase. Preparing for solar PV during the building design phase maximizes PV capacity potential and significantly improves the economics of future solar development. Solar readiness should be discussed early in the building design phase; even high-performance green buildings are not always developed as solar ready buildings.

Penetrations and obstructions on this high school's roof limit solar feasibility.

What is a solar ready roof?

A solar ready roof will have:

Sufficient load bearing capacity to accommodate future development of solar PV. A solar PV system typically adds an additional 2-7 pounds per square foot to building static loads, as well as potentially increasing wind-loading on the roof deck.

Significant roof area that is free of roof penetrations and obstructions, whereas a typical roof contains many scattered obstructions that impact solar feasibility.

Pre-installed electrical infrastructure. Running additional conduit to the roof is less expensive during construction than after the fact, and gives you the freedom to choose wiring paths, rather than being forced to, for example, install conduit along a building exterior.

What if my existing building is not solar ready?

Window washing anchors on this school's rooftop had the potential to limit PV capacity; however, the community elected to forego access to these anchors to maximize system size.

For those developing solar on existing buildings, it is important to consider access issues. For example, does the system design need to provide facilities managers with access to rooftop vent fans? If window-washing anchors are present on the roof, would the building owner be willing to forego access to these anchors and wash the building from ground level in order to take advantage of a much larger PV system?

The DOE Solar America Communities program provides more information on how communities can promote solar readiness at homes, buildings, and developments on their website.